Monday's Commodities Roundup

Published
7:00 pm CDT, Sunday, September 15, 2002

NEW YORK (Dow Jones/AP) _ Crude oil and other energy futures fell Monday in a day of muted trade as the market awaited clues from the Organization of Petroleum Exporting Countries ministers gathering in Osaka, Japan, on the future direction of the cartel's output policy.

But with little in the way of fresh news, traders sold positions taken last Friday when market jitters about Iraq's unwillingness to cooperate with U.N. weapons inspectors boosted October crude by nearly $1.

Traders selling in front of the October contract, which expires Friday, also contributed to the selling.

On Monday, October crude futures fell 14 cents to $29.67 a barrel on the New York Mercantile Exchange. October gasoline futures sank 1.20 cents to 79.36 cents a gallon. October heating oil futures ended 30 cents lower at 78.37 cents a gallon.

Also on the Nymex, the price of natural gas rose 4 cents to $3.507 per 1,000 cubic feet.

On London's International Petroleum Exchange, November North Sea Brent crude futures fell 15 cents to $28.52 a barrel.

OPEC delegates have begun to arrive in Japan ahead of Thursday's meeting where they will review the group's policy on maintaining production quotas for the fourth quarter.

Analysts see room for an increase in output based on estimates that global oil demand is poised to recover in the fourth quarter.

"The production policy that led to cuts in January has resulted in a decline in global crude stocks," said analyst Tim Evans with IFR Pegasus in New York.

He noted that according to a report last week by the International Energy Agency, even with the cartel's oversupply, the market could still absorb about 1 million barrels per day, if demand rises as expected.

Most oil ministers speaking publicly ahead of Thursday's meeting have reiterated that quotas should remain unchanged.

Earlier Monday, OPEC secretary general Alvaro Silva suggested that global stocks were sufficient and that prices were up on talk of war with Iraq.

Earlier fears that an attack by the U.S. and its allies on Iraq might lead Arab oil suppliers to scale back production were in part eased by Saudi Arabia's statement Monday that it may allow the use of its airbases to Iraq if the U.N. Security Council sanctioned the move.

Saudi Arabia has long said it would make up for any shortfall in output from Iraq's oil wells.

Traders and analysts expect another few days of choppy trade before the OPEC meeting gets underway.